What Can You Deduct from UK Capital Gains Tax on Property?
Are you aware of the allowable deductions for Capital Gains Tax on property in the UK?
This article breaks down what you can deduct to minimise your tax liability.
Our team of property tax experts can help you identify all the relevant allowable costs and expenses to reduce Capital Gains Tax.
Once you know all the expenses you can claim against the gains, you will be able to keep more of the sales proceeds in your pocket.
Please use our free online CGT calculator.
What are the basics?
As a property accountant with an expert team that manages 1,000s of landlords’ financial affairs, I appreciate that it can be confusing to navigate deductions for UK CGT.
If you are thinking of selling a property, it is important to understand the costs you can take to offset Capital Gains Tax.
This is paid when you make a profit from disposing of a buy-to-let that has increased in value.
The tax you pay is on the gain (the difference between what was paid and what it was sold for).
CGT is usually due on property that isn’t your main residence or on your main residence if you have let it out or used it for business.
This applies to any buy-to-let you own that isn’t your main residence, including buy-to-let properties and second homes.
If you inherit a house from a family member, you’ll only be liable if and when you sell it.
If you live in your main residence and haven’t let it out or used it solely for business purposes, you should be exempt.
To be exempt from Capital Gains Tax you must have lived in your home for the entire time you’ve owned it.
To find out more about deductions visit here.
Are you paying too much CGT when selling property?
If you’re selling your main residence, this is exempt from CGT if all of the following apply:
– You have one home and have lived in it as your main home for all the time you’ve owned it
– You have not let part of it out (having a lodger is allowed)
– You have not used part of your home solely for business purposes
– The grounds, including all buildings, occupy less than 5,000 square metres
– You did not buy it only to make a gain
If all of the above points apply, you will qualify for Private Residence Relief.
This means you will not have to pay any CGT.
If you’re a higher-rate taxpayer, Capital Gains Tax is calculated by deducting the price you purchased the property for from the new sale price.
You’ll then be left with your profit, of which CGT payable is 28% of that profit.
Understanding allowable deductions enables landlords to keep as much profit as possible when selling properties.
What are allowable deductions for Capital Gains Tax on property?
Before you calculate your final Capital Gains Tax bill, you can make certain allowable deductions, including:
– Private Residence Relief (for the period you have lived in the home plus an additional none (9) months
– Costs of buying and selling, including Stamp Duty, solicitor fees and estate agent fees
– Eligible costs of improvement such as an extension, a renovation or a new kitchen
You are not able to deduct maintenance costs or mortgage interest from your HMRC bill.
You can reduce your liability by doing the following:
– Keeping a record of costs and deducting them
– Offset your losses from other assets
– Make use of the spousal £6,000 (2023-24) £3,000 )2024-25) allowance
– Consider your spouse’s income if a lower tax rate
– Sell at the right time
What you should do next
I recommend that you take action to ensure you get the maximum benefit possible from allowable deductions on Capital Gains Tax on any property you own.
Book in time here to speak to my expert team today.
What are deductible expenses and costs in the context of selling residential buy-to-let properties or homes?
Deductible expenses and costs refer to expenses incurred during the ownership, such as maintenance, repair, legal fees, and estate agent fees, which can be subtracted from the sale proceeds to reduce the liability.
How do deductible expenses and costs help reduce CGT when selling UK residential properties?
By accurately documenting and deducting expenses from the sale proceeds, sellers can lower their gains, thus reducing their CGT liability and maximizing their net proceeds from the sale of buy-to-let properties or homes.
What types of expenses are considered deductible when calculating CGT on the sale of residential properties?
Deductible expenses include costs incurred for maintenance, repairs, improvements, legal fees related to the sale, and estate agent fees. These expenses are subtracted from the sale proceeds to determine the gain.
What Can You Deduct from UK Capital Gains Tax on Property?
Are you aware of the allowable deductions for Capital Gains Tax on property in the UK?
This article breaks down what you can deduct to minimise your tax liability.
Our team of property tax experts can help you identify all the relevant allowable costs and expenses to reduce Capital Gains Tax.
Once you know all the expenses you can claim against the gains, you will be able to keep more of the sales proceeds in your pocket.
Please use our free online CGT calculator.
What are the basics?
As a property accountant with an expert team that manages 1,000s of landlords’ financial affairs, I appreciate that it can be confusing to navigate deductions for UK CGT.
If you are thinking of selling a property, it is important to understand the costs you can take to offset Capital Gains Tax.
This is paid when you make a profit from disposing of a buy-to-let that has increased in value.
The tax you pay is on the gain (the difference between what was paid and what it was sold for).
CGT is usually due on property that isn’t your main residence or on your main residence if you have let it out or used it for business.
This applies to any buy-to-let you own that isn’t your main residence, including buy-to-let properties and second homes.
If you inherit a house from a family member, you’ll only be liable if and when you sell it.
If you live in your main residence and haven’t let it out or used it solely for business purposes, you should be exempt.
To be exempt from Capital Gains Tax you must have lived in your home for the entire time you’ve owned it.
To find out more about deductions visit here.
Are you paying too much CGT when selling property?
If you’re selling your main residence, this is exempt from CGT if all of the following apply:
– You have one home and have lived in it as your main home for all the time you’ve owned it
– You have not let part of it out (having a lodger is allowed)
– You have not used part of your home solely for business purposes
– The grounds, including all buildings, occupy less than 5,000 square metres
– You did not buy it only to make a gain
If all of the above points apply, you will qualify for Private Residence Relief.
This means you will not have to pay any CGT.
If you’re a higher-rate taxpayer, Capital Gains Tax is calculated by deducting the price you purchased the property for from the new sale price.
You’ll then be left with your profit, of which CGT payable is 28% of that profit.
Understanding allowable deductions enables landlords to keep as much profit as possible when selling properties.
What are allowable deductions for Capital Gains Tax on property?
Before you calculate your final Capital Gains Tax bill, you can make certain allowable deductions, including:
– Private Residence Relief (for the period you have lived in the home plus an additional none (9) months
– Costs of buying and selling, including Stamp Duty, solicitor fees and estate agent fees
– Eligible costs of improvement such as an extension, a renovation or a new kitchen
You are not able to deduct maintenance costs or mortgage interest from your HMRC bill.
You can reduce your liability by doing the following:
– Keeping a record of costs and deducting them
– Offset your losses from other assets
– Make use of the spousal £6,000 (2023-24) £3,000 )2024-25) allowance
– Consider your spouse’s income if a lower tax rate
– Sell at the right time
What you should do next
I recommend that you take action to ensure you get the maximum benefit possible from allowable deductions on Capital Gains Tax on any property you own.
Book in time here to speak to my expert team today.
